The Export Team

The minute you run an operation across international borders, you need to have a solid team in places that you won’t be able to frequent and to ensure that your products leave and arrive as they should.

Shipping Agents

In your home country, you will need a forwarding agent, otherwise known as a shipping agent. This person gets your goods cleared through customs so that they can leave the country, and handles all necessary statutory documentation. They will keep track of when your goods left and when they are expected to arrive. Reputable agents should belong to the South African Association of Freight Forwarders (SAAFF).

Local Distributors

The distributor is your local on-the ground link to your foreign market. A reliable distributor worth their salt will be able to give you regular feedback on how your goods are being received in the market and should also be able to help you obtain local import licences.

They may also clear your goods through customs when they arrive in the country you are exporting to (if this is not being handled by a clearing agent). Because of the critical role they play in the success of an export operation, you also need to ensure that you source an expert. They should have a sound track record of success and be able to supply you with a list of references. In addition, they will need to be able to show an established local network relevant to the product that you are exporting. An unblemished financial history is a non-negotiable. Distributors typically handle more than one brand of products so you need to ensure that they don’t have any competing products on their books. When you visit your export destination, ask for referrals to reputable distributors.

Bookkeeping

As for the actual preparation of the budget, you can create it manually or with the budgeting function that comes with most bookkeeping software packages.

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2. Know Your Incoterms

If you are not willing to risk the unusual, you will have to settle for the ordinary. – Jim Rohn

When global companies enter into contracts to buy and sell goods they are free to negotiate specific terms.

The Incoterms (international commercial terms) determine who pays the cost of each transaction segment, who is responsible for the loading and unloading of goods, and who bears the risk of loss at any given point during an international shipment.

Many traders are under the misconception that incoterms rules refer to the passing of title/ownership, when in fact it refers to the passing of risk and the dividing of costs during the physical movement of goods.

In order to minimise one’s risk, importers and exporters should familiarise themselves with Incoterms. Read more about it here.

3. Anticipate Extra Costs

The road to success is always under construction. – Arnold Palmer

Most first-time importers make the mistake of not anticipating extra costs and therefore they’re not completely prepared for the financial implications of importing products to South Africa.

It will be wise to engage the services of a freight forwarding or customs broker to assist you with understanding the trade terms of an agreement, and to talk to your bank to understand the financial implications of the order you are thinking of placing.

Also, it will also be helpful to keep the following pitfalls in mind when calculating importing costs:

How To Make The Most Of The Falling Rand By Exporting

The Rand is currently at its lowest point in history and analysts are not optimistic about it strengthening in the near future. If you have a quality product and production capacity this signifies an opportune time to start or boost export sales.

A weak Rand means that South African products can either compete at more competitive prices in international markets or, if priced at the market rate in an international currency, more profit can be obtained from a sale.

With the vast enhancements in global communications, ease of moving goods, growth of internet trading portals and increase in English literacy global trade is becoming easier than ever before. Below are some ways to start or grow exports.

Create a marketing strategy tailored to the international market targeted

For companies new to exporting it is advisable to start with a single product and a specific target market from where you can expand.

Spend some time researching the country/ies that you intend to export to. Research your competition. Are there local suppliers in the country? At what prices are comparable products selling both from local supplier and on the international market.

Does your product have any unique properties that may appeal to the target market you have chosen?

When creating your marketing material and strategy take into account the culture, language, ethics and religion of the local population and tailor your approach to appeal to them.

Marketing strategies to find buyers

An effective international marketing strategy may include:

Promoting products on established internet based business to business trade portals.

Attending international trade shows where you may showcase your product, arrange to meet with potential buyers attending the show or conduct market research.

Identify and target potential buyers in the proposed country of export directly. This can be done through making use of an agent or business partner in that country, by doing local internet searches in that country or through contacting trade associations such as the local chamber of commerce.

Use social media platforms such as LinkedIn to gain contacts in a targeted country.

Make use of export grants and trade agreements arranged by the South African government

As part of their efforts to boost the South African economy and support GDP growth the South African government has a number strategies in place to support export sales.

One of these strategies is the export grants available through the Department of Trade and Industry (DTI). Financial support is given to exporters to use on market research, trade missions, attending trade shows and hosting international buyers.

Costs covered by the grants may include exhibition fees, air tickets and a daily expenditure allowance whilst on an international marketing trip. More information on the DTI grants is available here.

South Africa is also part of a number of trade agreements that allow exporters to sell their goods with little or no duty tax being charged to the international buyer.

This lowers costs for the buyer and makes the goods more attractive. The most notable trade agreements are with a number of Southern African and European countries.

In order to qualify for the reduction in import duty each export to these countries needs to be accompanies with the appropriate South African certificate of origin. More information on trade agreements is available here.

Breaking into a foreign market may take longer than generating local sales, however the effort spent establishing an international client base may support your business for years and serve as a buffer against a drop in the South African economy.

1. Not having the correct permit for regulated goods can result in high storage fees or termination of goods

Certain goods are closely regulated by customs. In order to clear these goods from customs a permit may be required. Some permits can be obtained in a few days, but some take months.

Cargo that is not cleared by customs accumulates additional storage charges which could amount to thousands of Rands. Importers who choose not to pay the storage fees can either have the cargo terminated or sent back to the supplier. A common example is health supplements. Customs requires clearance from the Medical Control Council (MCC) before health supplements are allowed into the country.

Under the latest MCC procedures this could take up to 5 years. Another common example is a cellphones. Cellphones need to be approved for use on South African air frequencies, this could take months.

2. Payment of goods to a fake international supplier

International trade through the internet has grown at phenomenal rate. A negative factor to take into account when choosing your supplier online is that the only information available online is the positive, beneficial information that the supplier wants you to see.

4. Incorrect costing of imported goods

Not calculating the VAT and import duties, or not taking into account all the freight costs including inland transport cost and port fees can significantly influence the final landed cost of your cargo, eroding your profits.

5. If the ship sinks and you have no insurance you are liable to pay the cost of the ship

Most importers and exporters are not aware that part of the terms and conditions included when you send cargo by sea is that the cargo owners are also liable to cover any damage to the ship that occurs on the journey.

The proportion of liability is equal to the proportion of cargo a trader has on the ship. Luckily the chance of the ship sinking is very low! But be aware of this potential additional risk when deciding on freight insurance.

Knowledge is power when it comes to International Trade. It may seem that there is so much information out there that it is hard to know enough.